Tips to Ensure You Get Your Finances Right, For First-Time Employees
It is an exhilarating feeling to get a job, right after your graduation.
However, at the same time, it may be quite unnerving to step into the big bad world, all on your own, for the very first time.
As soon as you start on your very first job as an ‘adult’, you will realise that there are innumerable things that you will need to take care of simultaneously.
Neither school, nor college will have prepared you for this, and fulfilling the responsibilities of an adult might seem like an overwhelming task for the first couple of months. However, a lot of the responsibilities or tasks, all hurled at you unceremoniously, are interconnected.
In hindsight, there are only a limited number of crucial steps that you need to take, and a limited number of crucial things that you need to keep in mind, that will help streamline your job, finances, debt, credit score, and rent, among a hoard of other things.
Among the important things, that you need to learn to manoeuvre, your finances grab the top spot. Once you start getting a fixed amount in your account, at the end of every month, you need to carefully manage how you spend this amount.
If you do not manage your finances well, it will lead you down a slippery road, disrupting various other aspects of your life as well.
However, there is no need to fret just yet. Here are a few tips, to help you manage your finances right, and give your career the right start:
Once you land your first job, the first step should be to make sure that you have your bank accounts in place.
You must have a bank account in your name, in a bank whose services you are happy with. Since henceforth, a fixed lump sum will be credited each month in your account, and you will be taking various measures to put this money to good use, you must be comfortable with the proceedings of the bank.
If not, you must open an account in a bank of your choice before you begin working, as later on, it might prove to be a hassle.
Also, make sure that your company provides you with a pay slip so that you may have your taxes straight.
The Big Move
It is most likely that your first job will require you to move to another city.
In this scenario, the first challenge that you face is finding an apartment. The apartment that you choose holds significance because it will determine how much of your salary will you be investing on rent, every month.
You most likely will be tempted to rent a luxury home in the trendiest part of the town, but the trendiest part of the town will most likely also be the costliest part of the town. Therefore, it only makes sense to choose a part of the town which offers apartments at a reasonable price, is at a comfortable distance from your workplace, and has a friendly neighbourhood that will make you feel welcomed in a new city.
It is always a wise step to opt for a shared apartment initially. This way, you not only save up on rent, but also have a roommate to help you adjust with the move.
Maintaining Your Credit Score
Maintaining your credit score will seem like one of the scariest tasks you have to do, because your credit score can aid you or cripple you, all on the basis of how well you have managed your credit score.
To stay on top of your finance game, it is best to acknowledge that the sooner you pay off any debt, the better it will be for your future endeavours. Therefore, make sure to pay all your credit card loans by the end of each month, in order to avoid paying extra in fines.
Another important aspect to consider is that you should begin paying off your education loan as soon as you can, as it is only after you have paid off your debt that you can actually start saving up for your first car or your first home.
If we turn our attention to credit score now, you will find that by following the aforementioned steps, you can easily maintain a good credit score, which in turn will help you get loans from banks and make bigger purchases, such as a car or a house.
However, do not make the mistake of not using your credit card for the fear of debts. An absence of a credit score can handicap you in case you decide to make a big purchase, such as real estate.
Managing Your Purchases
It is an exhilarating feeling to receive an amount at the end of every month, for which you have toiled the entire month. And this exhilaration might sometimes lead you to make purchases that you regret later, like a luxury car that would bury you under debt, or an expensive piece of jewellery that you would hardly wear more than once a year.
While making any decision that involves you spending a huge chunk of your savings, you must always ask yourself the following questions:
- Is the item you are purchasing, a need or a want?
- Can you buy the same article at a lower price?
- Does the article add any significant value to the quality of your life?
If you find that the item is a want and not a need, can be bought at a lower price, maybe in another brand, and does not add any significant value to the quality of your life, reconsider the purchase.
Remember, no expensive trip with your friends, expensive clothes or expensive parties will give you pleasure if they ultimately land you in a debt, so spend wisely.
It is a common notion that one can always start saving up later in life. But it must be noted that the sooner you start saving up for your future, the easer your retirement will be.
It does seem a bit far-fetched to have to think about retirement and pension, when you have just started a new job, however, clever are those who think long term, even when they are just starting out.
The most effective way to ensure that you save a certain amount from your salary, every month, is to set up a savings account, where you credit your savings from your checking account as soon as you receive your salary.
While saving, you must realise that every penny that you save counts, whether you decide to credit a certain amount from your checking account into a savings account every month, or save a few bucks every day by drinking coffee at home instead of the coffee shop. Every effort helps you build a better future for yourself.
If you feel it is too late for you to start saving, you can go through all your insurance, loan or mortgage documents to see whether you were sold the PPI policy.
Once you find out that PPI was wrongly sold to you or was sold to you without your concent, you can move on to make a PPI claim. Amount received as a compensation for mis-sold PPI can be then used for savings and betterment of your future.
Another step that you can take, is to speak to your bank about the pension plans that they have, and set up a pension fund, where you transfer a certain amount every month.
Certain companies also help their employees set up a pension plan or a savings plan, where they contribute a certain amount to every employee’s plan. These pension plans offer the maximum advantages. So, if your company does offer to set up a pension plan for you, do not pass up on the offer.
Daunting as it may seem, managing your finances the right way only requires vigilance from you. Vigilance in terms of the ongoing market trends and how to invest your money to gain the maximum out of the trends, vigilance in relation with the purchases that you make, and vigilance in relation to saving your money for a better future.
By being a vigilant young professional, you can not only excel at managing your finances on your own, but also set an example for your peers and colleagues.